I am attempting to run a multigroup CFA and I received an error message stating my standard errors could not be estimated and my model may not be identified. I utilized the Tech1 output to identify the problematic parameter. The parameter was in the PSI matrix. Next, I utilized the tech 4 output to view the covariance and it did not appear to be problematic. After some tinkering, I found that fixing my latent variable variances @1 solved the issue. I was wondering if you might be able to discuss some reasons for this, or at least point to some literature to help understand why this worked?

If you did not free the first factor loadings for each factor, then fixing the factor variances to one is not proper. The Mplus default is to fix the first factor loading to one to set the metric of the factor. You do not want to also set the metric by fixing the factor variance to one. Please send the output before you did this and your license number to support@statmodel.com.